Company Registration in Estonia

POSSIBLE OPTIONS TO REGISTER A COMPANY IN ESTONIA

1. Company registration in Estonia with e-Resident card

The e-Resident card allows you to register a company in Estonia remotely (without visiting Estonia). To set up a company in Estonia, you need to have the e-Resident cardlegal address and contact person in Estonia...
from 215 EUR

2. Company formation in Estonia (OÜ) by visit

For company formation client must send all necessary information in advance and visit Estonia for 1 day. The price does not include the state fee and notary services. It is necessary to have a registered address and a contact person in Estonia...
from 235 EUR

3. Opening a company in Estonia by a power of attorney

To register a company in Estonia by power of attorney, you must prepare a notarised power of attorney in Estonian for a representative of our company. In case of establishing a company by power of attorney, your presence in Estonia...
from 235 EUR

4. Ready-made/shelf companies in Estonia

In addition to the establishment of new companies, we also offer to acquire an already established company. We do offer companies without activities and companies that have been active. All companies filed annual reports...
from 1,000 EUR

Introduction

Recently, many of the world’s fastest growing companies have started their activities in Estonia, the northern European country. Perhaps you have already heard of companies like Skype, Bolt, TransferWise, Playtech or Pipedrive?

Estonian business strategy is based on a well-developed digital infrastructure and belief that almost everything can be done online with minimal funds and time waste. To date, some of the established startups are companies run by digital nomads, entrepreneurs, freelancers, and self-employed. The e-Residency programme was created for them, aimed at opening access to the Estonian business environment to entrepreneurs from all over the world and simplifying the processes of the business sector. Thanks to Estonia’s membership in the EU, e-Residents have the right to use e-services on an equal basis with Estonian residents and manage their company fully remotely, while their business is based in the European Single Market.

Location-independent lifestyle is made possible by e-Residency: low-cost administration, ease of doing business, and preferential taxation. Company in Estonia OÜ will help you set up a startup in Estonia and manage your business wherever you are.

Benefits of company registration in Estonia

Estonia is one of the digitised countries, offering cutting edge opportunities and favorable conditions for starting a business. This is well tracked by the average number of startups in Europe – 5 per 100,000 people, while in Estonia this mark is 6 times higher. Thus, Estonia ranks third in the ranking of European countries for the establishment of start-ups due to a number of advantages of launching an Estonian company:

Company in Estonia OÜ offers the following types
of company registration:

  1. Registration of a company with e-Resident card
    When establishing a company using an e-Resident card, a prerequisite is the presence of a legal address and a contact person in Estonia. The state fee of 265 EUR is not included in the price.
  2. Company formation in Estonia (OÜ) by visit
    It is mandatory to have a legal address and a contact person in Estonia. To open a company in Estonia, you must be present at a notary – the company will be established within 2-5 business days after the application is submitted. For company formation in Estonia (OÜ) you must pay a state fee of 200 EUR and notary services in the amount of 165 EUR.
  3. Opening a company in Estonia (OÜ) by proxy
    It is mandatory to have a legal address and contact person in Estonia. To open a company in Estonia by power of attorney, you will need to prepare a notarised power of attorney in Estonian for a representative of our company. When establishing a company by proxy, your presence in Estonia is not required. When registering a company (OÜ), you must pay a state fee of 200 EUR and notary services in the amount of 165 EUR.

Forms of business in Estonia

According to the Commercial Code, there are 6 forms of business in Estonia:

  1. Limited Liability Partnership or Private Limited Company (OÜ)
  2. Public Limited Company (AS)
  3. General Partnership (TÜ)
  4. Limited Partnership (UÜ)
  5. Commercial Association (Tulundusühistu)

In addition to the listed legal forms of entrepreneurship, an individual entrepreneur can operate as a Sole Proprietor (FIE), which must also be entered in the Commercial Register.

Foreign companies can also offer their goods or services by opening a branch in Estonia. The branch must be registered in the Commercial Register by submitting an application with all the necessary documentation. It should be noted that the branch is not a form of entrepreneurial activity, and the foreign company is fully responsible for the obligations arising from the activities of the branch.

Before determining the appropriate form of business, you should answer these fundamental questions that will determine the rules of the day-to-day business of your company:

How will the company be managed?

What will the company be called?

Who will act as a shareholder?

What will be the initial field of activity?

What will be the location of the company and its legal address?

The most common form of doing business in Estonia is a Limited Liability Partnership (OÜ). Below, we will take a closer look at each legal form in Estonia. Detailed information on the types of business conduct is also available in the Commercial Code.

Limited Liability Partnership (OÜ)

A Limited Liability Partnership (Osaühing or OÜ) is the most common form of business for company formation in Estonia. Holders of an Estonian ID-card or e-Resident card can set up a private limited company and manage it online.

The advantage of an LLP is simple and quick registration, as well as a relatively small share capital rate (2,500 EUR). Among the advantages is the fact that shareholders are not personally liable for the obligations of such a company.

Foundation of an LLP costs 200 EUR. When established electronically in an expedited manner, the state fee will be 265 EUR. Subsequently, the state fee is recognised as the commercial expenses for setting up a private limited company.

Before the payment of the share capital, the founders are personally liable for the missing contribution. Such a company should have a governing body (Management Board) that represents and manages the company. The Board may consist of one or more members. Board members are not required to own shares in the company.

If more than half of the members of the Management Board do not reside permanently in Estonia, the company must submit a contact person to the Commercial Register. Also, the foreign owner must provide his address and email address.

A private limited company can be incorporated without depositing share capital if the proposed field of activity does not require it. The share capital of an LLP will be formed from the obligations of the founders in the amount of the ascertained contribution.

If the annual turnover of the company exceeds 40,000 EUR in Estonia, the founder must register as a VAT payer with the Tax and Customs Board. In addition, some areas of activity require a license (for example, cryptocurrency business).

The Tax and Customs Board will review the application within 5 business days from the date of its submission and on an expedited basis – no later than the next business day.

Public Limited Company (AS)

A Public Limited Company (Aktsiaselts or AS) is a form of business for company formation in Estonia with the highest requirements for the authorised capital (at least 25,000 EUR) and must have a multi-level management structure.

The advantages of a Public Limited Company:

  • Possibility of listing the company on the stock exchange
  • Ability to attract a wide range of shareholders
  • Suitable for the implementation of large projects
  • Shareholders are not personally liable for the obligations of a PLC

One or more natural or legal persons, with or without subscription to shares, can establish a PLC in Estonia. The company is responsible for the fulfillment of its obligations with all of its property. The shareholder is not personally liable for the obligations of the Public Limited Company. Compared to a private company, a member of the Board of a PLC must be registered with the Estonian Central Register of Securities, and the rights related to registered shares will belong to the person who is indicated as a shareholder.

It is necessary that a Public Limited Company has the Management Board and the Supervisory Board. The Supervisory Board usually consists of 3 members, not necessarily shareholders, but half of them must be EU residents. The Supervisory Board appoints and organises the management of the company. Members of the Supervisory Board cannot be members of the Management Board. If more than half of the members of the Management Board are non-residents of Estonia, the company must submit to the Commercial Register a contact person in Estonia where the necessary documents can be sent. In addition, a PLC must have an auditor appointed.

The state duty for the establishment of a Public Limited Company is 200 EUR. Subsequently, the state fee is recognised as commercial expenses for the establishment of PLC.

The application for the incorporation of the Public Limited Company into the Commercial Register must be accompanied by a notice from the bank or payment institution regarding the deposit of the share capital. If the contribution is non-monetary, documents will instead be required to prove the cost, delivery, receipt, and audit.

Online registration of a Public Limited Company is not yet available. A public limited company must be registered with a notary. The notary fee for founding a PLC depends on the number of shareholders and the size of the share capital.

One of the main features of a public limited company is the requirement to register shares with the Estonian Central Register of Securities or with another depository.

The Tax and Customs Board will consider the application for registration of a PLC within 5 business days from the submission date.

  • If you plan to operate in the business field with special requirements, you must apply for an appropriate license.
  • The public limited company must be registered with the Tax and Customs Board if the planned annual turnover exceeds 40,000 EUR.
  • Employees of the company will need to be registered with the Employment Register.

General Partnership (TÜ) and Limited Partnership (UÜ)

A General Partnership (Täisühing or TÜ) and a Limited Partnership (Usaldusühing or UÜ) are relatively rare business forms for company formation in Estonia. They are suitable for starting a business when a larger number of stakeholders are involved or to support the economic activity of shareholders.

The advantages of a General Partnership or Limited Partnership are simple and quick registration and no requirements for the minimum amount of the share capital.

General Partnership (TÜ)

A General Partnership must be made up of two or more partners who operate under a common business name and are unlimited jointly and severally liable for the company’s obligations. A General Partnership operates on the basis of an association agreement concluded between partners. No minimum capital investment is required, and profits are distributed among shareholders in accordance with their share, unless otherwise specified in the agreement. The association agreement does not require notarisation or filing with the Commercial Register.

Limited Partnership (UÜ)

An Estonian Limited Partnership must consist of at least one general shareholder and one limited shareholder operating under a common commercial name. At least one of the members is the general partner with unlimited liability for the obligations of the partnership; and one of them is a limited shareholder who has limited liability in the amount of his contribution. The general partner will be solely responsible for the legal obligations of the company, while the limited partner is liable up to the amount of the investment.

Methods of establishing TÜ and UÜ:

  1. Online on the Company Registration Portal (digital signature required)
  2. Institution through a notary

The state fee for the registration of a General or Limited Partnership is 13 EUR. When using notary services, you will also have to pay a notary fee. The fee for notarisation of the authenticity of the signature on the application is 12,75 EUR (excluding VAT).

The Tax and Customs Board will consider an application for registration of a General Partnership or Limited Partnership within 5 business days from the submission date.

  • If you plan to operate in the business field with special requirements, you must apply for an appropriate license.
  • The company must be registered with the Tax and Customs Board if the planned annual turnover exceeds 40,000 EUR.
  • Employees of the company will need to be registered with the Employment Register.

Commercial Association (Tulundusühistu)

A Commercial Association (Tulundusühistu) is a company aimed at supporting and promoting the economic interests of its members through collective business activities, members of which act:

  • As consumers or users of other goods
  • In the role of suppliers
  • Through labour contribution
  • Through the use of services
  • In another similar way

A Commercial Association can be created by at least two persons (legal or physical). The advantage of a commercial association is the absence of personal liability of its members for the obligations of the association. The charter can provide either full personal responsibility of the participants, or within the limits determined by the charter.

A company can be registered only through a notary, who will certify the application for entering the company into the Commercial Register and prepare the necessary constituent documents. Moreover, in order to create a Commercial Association, it is necessary to pay a state fee of 200 EUR. VAT will be added to all notary fees.

In the event of full personal liability, the association does not require a minimum share capital. If the charter does not provide for the personal liability of the members of the cooperative for the obligations of the association, the amount of the authorised capital will be at least 2,500 EUR.

The Tax and Customs Board will consider the application for registration of a Commercial Association within 5 business days from the date of its receipt.

  • If you plan to operate in the business field with special requirements, you must apply for an appropriate license.
  • The company must be registered with the Tax and Customs Board if the planned annual turnover exceeds 40,000 EUR.
  • Employees of the company will need to be registered with the Employment Register.

Sole Proprietor (FIE)

An individual entrepreneur (IE, Füüsilisest isikust ettevõtja or FIE) is a form of business that is best suited for those who are running small businesses alone or with a family.

The advantages of operating as Sole Proprietor:

  • Simple registration
  • There are no requirements for the minimum amount of capital
  • Individual entrepreneurs are not required to have articles of association

However, it is important to note that an individual entrepreneur bears unlimited personal liability for debts incurred in doing business.

An individual entrepreneur may suspend their activities by notifying the Commercial Register with an indication of the time interval. An individual entrepreneur performing seasonal work can notify the start and end dates of the Sole Proprietor’s business activity.

When creating a FIE, there is no need to draw up a memorandum or articles of association. An important requirement is a bank account suitable for doing business.

To register as a Sole Proprietor, you will need to pay a state fee of 13 EUR.

  1. Online registration
    Fast-track electronic registration will take only a few hours. To register as a FIE in Estonia, you must provide the following information:

    • Name of the entrepreneur
    • Personal code
    • Name of a Sole Proprietor with the abbreviation “FIE” at the end
    • Address and other legal data
  2. Registration with a notary
    A notarial application for registration of a FIE takes 5 business days from the date of its submission. The fee for notarisation of the authenticity of the signature is 12,75 EUR. VAT will be added to all notary fees.

    • If you plan to operate in the field of ​​activity, where the special requirements are imposed, you will have to apply for an appropriate license.
    • An individual entrepreneur must be registered with the Tax and Customs Board if the planned annual turnover exceeds 40,000 EUR.
    • Employees of the company will need to be registered with the Employment Register.

It is assumed that the Sole Proprietor will keep the accounting records of the company in accordance with the provisions laid down in the Estonian Accounting Act.

Contact Company in Estonia OÜ for detailed information on the steps to be taken to establish your company in Estonia.

Company formation in Estonia 2023

In Estonia, the amendments of the Commercial Code will enter into force on 1 February 2023, according to which it will be possible to establish a limited liability company with statutory capital of 1 eurocent. In the e-business portal, the report for the financial year is usually drawn up in full euros (possibly also in thousands). When preparing the report in full euros, the share capital should be reflected according to the rounding rule, i.e., for example, in the case of a share capital of 1 cent, the share capital column should indicate 0 euros. If necessary, it is possible to disclose information on the exact amount of the statutory capital in the form of text in a separate annex provided for this purpose.

There is also confirmation from the Center of Registers and Information Systems that rounding of the statutory capital in the accounting report does not cause problems in internal audits of the report during the preparation of the report, as well as in subsequent checks of the report for compliance with the data in the commercial register.

We would also like to remind you that according to the section 26 of “Information to be disclosed in the notes”, the following information must be disclosed on capital in the financial statements:

  • number and nominal value of issued and subscribed shares or shares at the beginning and end of the period (for different types of shares);
  • the number of shares and parts issued during the period, the nominal value and the consideration received on issue;
  • the number of shares and units redeemed, sold and redeemed during the period and their book value;
  • a description of the reserves recorded in equity and their changes during the period;
  • other changes in equity, unless they are described in the statement of changes in equity.

Articles of association of an Estonian company

Period of financial year

Although the company’s financial year usually coincides with the calendar year (1 January – 31 December), there are quite a few companies whose financial year differs from the calendar year (for example, 1 July – 30 June). This is done for different reasons, but one of the most common is the seasonality of the company’s activities. Since companies have 6 months after the end of the financial year for the submission of the annual report, it is important to know the period of the financial year so that the report is not submitted too late (or too early) by mistake.

Statutory share capital

The minimum capital requirement is 2500 euros, but for many years it has been possible to found a limited liability company without a contribution. Since the setting up of a new company includes certain expenses, it is good if there are funds on the company’s bank account from the start, i.e. the statutory capital is deposited. However, if a shareholder is unable or unwilling to contribute immediately, the articles of association must state when the shareholder plans to contribute and how it will be reflected in the company’s balance sheet.

Company formation of a limited liability company with a contribution of:

D: bank EUR 2,500
K: share capital EUR 2,500

Setting up share capital without payment, if the company is entitled to receive money from the shareholder and the payment deadline is set:

D: shareholder claim EUR 2,500
K: share capital EUR 2,500

Setting up the statutory capital without a contribution, if the term of contribution is not specified in the charter:

D: statutory capital without depositing EUR 2,500
K: statutory capital EUR 2,500

Amount of reserve capital

The reserve capital is no longer mandatory for private companies, so you can choose whether the company has a reserve capital of x % of the statutory capital or not. Therefore, unless a private limited liability company has a good reason to have reserve capital, it is recommended not to have reserve capital – ie, funds are not tied up in equity. In the case of a new company, care should be taken as to whether the company has capital reserves or not. With an existing company, care must be taken to ensure that the articles of association are not changed and that the reserve capital is not cancelled. In this case, the available reserve capital is subject to write-off from the balance sheet.

Entries when setting up reserve capital:

D: profit for the reporting year  x EUR
K: retained earnings of previous periods x EUR
D: retained earnings of previous periods y EUR
K: reserve capital y EUR

Entry on cancelling reserve capital:

D: reserve capital y EUR
K: retained earnings of previous periods y EUR

Costs of company formation in Estonia

In addition to the articles of association, a shareholder may choose whether the costs of incorporation will be borne by the shareholder according to the nominal value of the share or by a limited liability company. If the company is established in the register of electronic enterprises, the state duty in 2022 is EUR 265. Therefore, if the shareholder does not want to spend his personal money excessively, the articles of association should stipulate that the costs of the establishment are borne by the limited liability partnership, and thus the shareholder can return the state duty paid to him free of charge from the company’s bank account.

Company fomation costs:

D: amount of state duty EUR 265
K: debt to shareholder EUR 265

Reimbursement of establishment cost to the shareholder:

D: debt to shareholder EUR 265
K: bank EUR 265

 

Statutory capital deposit

The tax register keeps records of the statutory capital transferred to the deposit account of the court in an expedited manner of the commercial register, and their return.

The contribution to the statutory capital is registered in the tax register, if the contribution to the statutory capital of the company created in the e-register through the business portal was made to the current account of the Ministry of Finance (judicial deposit account).

Information on the payment and return of fixed capital can be seen in the electronic services environment of the Tax and Customs Department from the e-MTA prepayment account statement.

  • The deposit must be requested back within one year of its entry in the register.
  • If the period is exceeded, the contribution remains in the state’s income.

Return of the contribution to the statutory capital paid in the express procedure of the commercial register

When the company is registered

  • If you transferred a contribution to the statutory capital to the settlement account of the Ministry of Finance at the time of incorporation, then after the registration of the company, the representative of the legal entity must go to the relevant branch of the bank and open a settlement account with the company.
  • After opening a current account, submit to the e-register via the business portal the  ”Application for return of capital”.
  • The application must be digitally signed.
  • The statutory capital is credited to the company’s settlement account within five working days after the submission of the correct application.
  • Commercial Code stipulates that the company may demand the return of the deposit to its payment account not later than one year after its registration. If the period is exceeded, the contribution remains in the state’s income.

If the company is not registered

  • If you transferred your contribution to the statutory capital to the current account of the Ministry of Finance at the time of the company’s establishment, it will be received on the advance payments account of the Tax and Customs Department for Fees and Guarantees.
  • In case of refusal to register the company, you can apply for the return of the contribution to the statutory capital by initating an out of court proceeding to the district court at your location.
  • A state fee of EUR 50 must be paid.
  • The court shall allow the application by court order.
  • The deposit will be returned within five working days from the date of entry into force, if the effective court order is sent to the Tax and Board.

If the representative of the legal entity cannot submit an application to the e-registry through the business portal

  • If none of the members of the management board of a company has means of authentication that allows signing an application for the return of the statutory capital in the e-register through the business portal with a digital signature, the member of the management board must submit a notarized application to the Tax and Customs Board through the Registration Department of the Tartu District Court.
  • Compliance with the requirements of the application is checked by the Registration Department.

Return of excess statutory capital

  • If you have paid in more than the statutory capital, you must apply to the district court at your location in an out-of-court procedure to recover the excess amount.
  • A state fee of 50 euros must be paid.
  • The court allows the application for the return of excess statutory capital by a court order.
  • The deposit will be returned within five working days from the date of entry into force, if the effective court order is sent to the Tax and Board.

Merger with another company and de-registration

  • If the founded company merged with another company that became the legal successor of the created company less than a year after its creation, and the founded company was de-registered, an application for the return of the contribution without a claim can be submitted to the district court at your location.
  • A state fee of 50 euros must be paid.
  • The court allows the application with its court order.
  • The deposit will be returned within five working days from the date of entry into force, if the effective court order is sent to the Tax and Customs Board.

Contribution of share capital for an already existing Estonian company

If a limited liability company was initially established without a direct contribution, after payment of the statutory capital, it is necessary to submit an application to the e-register portal to remove the entries on the registration of the limited liability company without a contribution.

To do this, one needs to change the data on the e-business portal using an ID card or mobile ID.

After submitting the application, one will see information about the application, as well as the deadline for the procedure, before which the registrar will consider the application and make changes to the register or inform the limited liability company about the need to supplement the register.

If one needs to change the application, one can do so before the registrar updates the registry.

FREQUENTLY ASKED QUESTIONS

  • What are the advantages of establishing a company in Estonia?
  • How much does it cost to register a company in Estonia?
    The cost of a company registration depends on the type of incorporation. For more information please see the prices listed above.
  • How long does it take to register a company in Estonia?
    The company will be registered during 5 business days after signing the company registration application.
  • What activities can an Estonian company carry on?
    An Estonian company is allowed to carry on any authorised activity. A company can perform several different types of activities at the same time.
  • How to register a company in Lithuania?
    Please read an article Open a company in Lithuania.
  • Can a foreigner be the owner and director of an Estonian company?
    Yes, a foreigner can be the owner and director of an Estonian company.
  • How many owners and directors should an Estonian company have?
    At least one owner from among Board members.
  • What is the minimum share capital of an Estonian company?
    The minimum share capital is 2,500 EUR, which can be contributed within 10 years. In Estonia, a company can be established without making a share capital contribution.
  • Is it possible to get a VAT number for an Estonian company?
    Yes, a VAT number can be obtained before the company starts to operate.
  • How to open a bank account for an Estonian company?
    After the company is established, all Company in Estonia OÜ customers get assistance and detailed information, free of charge, on how to open an account. See Open a bank account in Estonia.
  • Should an Estonian company have employees?
    An Estonian company may have no employees.
  • What are annual costs for maintaining a company in Estonia?
    As prescribed by law, an Estonian company owned by a foreigner shall have a contact person (200 EUR/year) and a legal address in Estonia (200 EUR/year).
  • What taxes are charged when doing business on behalf of an Estonian company?
    In Estonia, there is no income or turnover tax, and therefore there is no pre-distribution tax. Salaries of non-residents of Estonia living outside the country are subject to a 20% income tax. Dividends are taxed at 25%. Read more Taxes levied upon Estonian companies.
  • Can I apply for the Estonian Schengen Visa?
    Upon setting up a company in Estonia, you have every reason to apply for a visa to visit Estonia. We will help prepare an invitation for all company-related persons.
    - A visa application shall be submitted personally at an Estonian representation office (vm.ee/et/node/2430) or at an office of a Schengen country representing Estonia (vm.ee/et/node/36138).
  • At what point must the share capital be paid?
    The company can be created without an initial contribution to the authorised capital. The Estonian Entrepreneurship Law stipulates that the contribution of the share capital is made during the establishment of the company or later.
    All shareholders of the company are personally liable for the full payment of the corresponding share in the share capital within one year, but not later than after the payment of dividends. If the share capital is not paid, the possibility of paying dividends will not arise.
  • How to name a company?
    The name of the company must be limited to the Estonian alphabet and the use of any symbols is not permitted. The name must be unique and clearly distinguishable from the names of other companies and brands previously registered in Estonia. It is important to ensure that your unique company name has not been previously trademarked.
    When establishing a company with Company in Estonia OÜ, consultation on a suitable and relevant name is included in the price ordering company registration in Estonia. Our specialists individually check the availability of the name chosen by the client in the Commercial Register.
  • Can my company be involved in more than one field of business activity?
    Yes, it is not prohibited in Estonia to work in more than one field of business activity, unless it requires additional notification or licensing. However, it should be noted that the EMTAK code, which is assigned to the company when choosing the scope of your business, after the submission of the annual report, will not be changed.
    EMTAK is the basis for defining the field of private business, which, in turn, is an important source of statistics. Classification by code improves international comparability within a category.
  • Can there be multiple founders?
    Yes, all founders must enter the Estonian Commercial Register with an e-resident card and provide their digital signature.